Delta is expecting to report a 3% to 4% operating profit margin for the third quarter and a breakeven operating margin for the full year, thanks in part to lower fuel prices than previously anticipated, the airline said in an investor update issued Monday.
In July, when the airline released its second-quarter earnings, it projected a 1% to 3% operating margin for the third quarter. That was based on a jet fuel price of $2.17 per gallon, which it now expects to be $2.14. It is projecting the cost will end up averaging $2.13 for the full year.
Delta also is forecasting that its fourth-quarter unit revenue decline will be 10 points better than in the third, although it should be noted that year-over-year comparisons get easier because of the timing of last year’s economic free-fall.
The airline also reported that it expects its systemwide load factor in September and October to be about 82%, which some industry analysts are taking as a sign that bookings have stabilized. Those load factors would be about the same as or slightly higher than in the same months last year.
JP Morgan analyst Jamie Baker said Monday that he believes Delta’s guidance is encouraging. “We continue to believe that airlines are in the process of turning a financial corner, with steady guidance disappointment yielding to slight improvement, and seemingly endless negative demand rhetoric yielding to gradual — if slight — sequential improvement,” Baker said in a note to investors.